SECOND DIVISION

[G.R. No. 170166. April 6, 2011.]

JOE A. ROS and ESTRELLA AGUETE , petitioners, vs . PHILIPPINE

NATIONAL BANK-LAOAG BRANCH , respondent.

DECISION

CARPIO , J : p

The Case
G.R. No. 170166 is a petition for review 1 assailing the Decision 2 promulgated on
17 October 2005 by the Court of Appeals (appellate court) in CA-G.R. CV No. 76845.
The appellate court granted the appeal led by the Philippine National Bank-Laoag
Branch (PNB). The appellate court reversed the 29 June 2001 Decision of Branch 15 of
the Regional Trial Court of Laoag City (trial court) in Civil Case No. 7803.
The trial court declared the Deed of Real Estate Mortgage executed by spouses
Joe A. Ros 3 (Ros) and Estrella Aguete (Aguete) (collectively, petitioners), as well as the
subsequent foreclosure proceedings, void. Aside from payment of attorney's fees, the
trial court also ordered PNB to vacate the subject property to give way to petitioners'
possession.
The Facts
The appellate court narrated the facts as follows:
On January 13, 1983, spouses Joe A. Ros and Estrella Aguete led a
complaint for the annulment of the Real Estate Mortgage and all legal
proceedings taken thereunder against PNB, Laoag Branch before the Court of
First Instance, Ilocos Norte docketed as Civil Case No. 7803.
The complaint was later amended and was ra ed to the Regional Trial
Court, Branch 15, Laoag City.

The averments in the complaint disclosed that plaintiff-appellee Joe A. Ros

obtained a loan of P115,000.00 from PNB Laoag Branch on October 14, 1974 and
as security for the loan, plaintiff-appellee Ros executed a real estate mortgage
involving a parcel of land — Lot No. 9161 of the Cadastral Survey of Laoag, with
all the improvements thereon described under Transfer Certi cate of Title No. T-
9646.

Upon maturity, the loan remained outstanding. As a result, PNB instituted

extrajudicial foreclosure proceedings on the mortgaged property. After the
extrajudicial sale thereof, a Certi cate of Sale was issued in favor of PNB, Laoag
as the highest bidder. After the lapse of one (1) year without the property being
redeemed, the property was consolidated and registered in the name of PNB,
Laoag Branch on August 10, 1978.

Claiming that she (plaintiff-appellee Estrella Aguete) has no knowledge of

the loan obtained by her husband nor she consented to the mortgage instituted
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 on the conjugal property — a complaint was led to annul the proceedings
pertaining to the mortgage, sale and consolidation of the property — interposing
the defense that her signatures a xed on the documents were forged and that
the loan did not redound to the benefit of the family.

In its answer, PNB prays for the dismissal of the complaint for lack of
cause of action, and insists that it was plaintiffs-appellees' own acts [of]
omission/connivance that bar them from recovering the subject property on the
ground of estoppel, laches, abandonment and prescription. 4

The Trial Court's Ruling

On 29 June 2001, the trial court rendered its Decision 5 in favor of petitioners.
The trial court declared that Aguete did not sign the loan documents, did not appear
before the Notary Public to acknowledge the execution of the loan documents, did not
receive the loan proceeds from PNB, and was not aware of the loan until PNB noti ed
her in 14 August 1978 that she and her family should vacate the mortgaged property
because of the expiration of the redemption period. Under the Civil Code, the effective
law at the time of the transaction, Ros could not encumber any real property of the
conjugal partnership without Aguete's consent. Aguete may, during their marriage and
within ten years from the transaction questioned, ask the courts for the annulment of
the contract her husband entered into without her consent, especially in the present
case where her consent is required. The trial court, however, ruled that its decision is
without prejudice to the right of action of PNB to recover the amount of the loan and its
interests from Ros.
The dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby rendered:

1. DECLARING the Deed of Real Estate Mortgage (Exhibit "C") and the
subsequent foreclosure proceedings conducted thereon NULL and VOID;

2. ORDERING the Register of Deeds of the City of Laoag to cancel TCT

No. T-15276 in the name of defendant PNB and revert the same in the name of
plaintiffs spouses Joe Ros and Estrella Aguete;

3. ORDERING defendant to vacate and turnover the possession of the

premises of the property in suit to the plaintiffs; and
4. ORDERING defendant to pay plaintiffs attorney's fee and litigation
expenses in the sum of TEN THOUSAND (P10,000.00) PESOS.

No pronouncement as to costs.

SO ORDERED. 6

PNB led its Notice of Appeal 7 of the trial court's decision on 13 September
2001 and paid the corresponding fees. Petitioners led on the same date a motion for
execution pending appeal, 8 which PNB opposed. 9 In their comment to the opposition
1 0 led on 10 October 2001, petitioners stated that at the hearing of the motion on 3
October 2001, PNB's lay representative had no objection to the execution of judgment
pending appeal. Petitioners claimed that the house on the subject lot is dilapidated, a
danger to life and limb, and should be demolished. Petitioners added that they obliged
themselves to make the house habitable at a cost of not less P50,000.00. The repair
cost would accrue to PNB's bene t should the appellate court reverse the trial court.
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 PNB continued to oppose petitioners' motion. 1 1
In an Order 1 2 dated 8 May 2002, the trial court found petitioners' motion for
execution pending appeal improper because petitioners have made it clear that they
were willing to wait for the appellate court's decision. However, as a court of justice and
equity, the trial court allowed petitioners to occupy the subject property with the
condition that petitioners would voluntarily vacate the premises and waive recovery of
improvements introduced should PNB prevail on appeal.
The Appellate Court's Ruling
On 17 October 2005, the appellate court rendered its Decision 1 3 and granted
PNB's appeal. The appellate court reversed the trial court's decision, and dismissed
petitioners' complaint.
The appellate court stated that the trial court concluded forgery without
adequate proof; thus it was improper for the trial court to rely solely on Aguete's
testimony that her signatures on the loan documents were forged. The appellate court
declared that Aguete a xed her signatures on the documents knowingly and with her
full consent.
Assuming arguendo that Aguete did not give her consent to Ros' loan, the
appellate court ruled that the conjugal partnership is still liable because the loan
proceeds redounded to the bene t of the family. The records of the case reveal that the
loan was used for the expansion of the family's business. Therefore, the debt obtained
is chargeable against the conjugal partnership.
Petitioners led the present petition for review before this Court on 9 December
2005.
The Issues
Petitioners assigned the following errors:
I. The Honorable Court of Appeals erred in not giving weight to the
findings and conclusions of the trial court, and in reversing and setting aside such
findings and conclusions without stating specific contrary evidence;

II. The Honorable Court of Appeals erred in declaring the real estate
mortgage valid;
III. The Honorable Court of Appeals erred in declaring, without basis,
that the loan contracted by husband Joe A. Ros with respondent Philippine
National Batik-Laoag redounded to the bene t of his family, aside from the fact
that such had not been raised by respondent in its appeal. 1 4

The Court's Ruling

The petition has no merit. We affirm the ruling of the appellate court.
The Civil Code was the applicable law at the time of the mortgage. The subject
property is thus considered part of the conjugal partnership of gains. The pertinent
articles of the Civil Code provide:
Art. 153. The following are conjugal partnership property:
(1) That which is acquired by onerous title during the marriage at the
expense of the common fund, whether the acquisition be for the partnership, or
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 for only one of the spouses;
(2) That which is obtained by the industry, or work or as salary of the
spouses, or of either of them;
(3) The fruits, rents or interest received or due during the marriage,
coming from the common property or from the exclusive property of each spouse.
Art. 160. All property of the marriage is presumed to belong to the
conjugal partnership, unless it be proved that it pertains exclusively to the
husband or to the wife.
Art. 161. The conjugal partnership shall be liable for:

(1) All debts and obligations contracted by the husband for the bene t
of the conjugal partnership, and those contracted by the wife, also for the same
purpose, in the cases where she may legally bind the partnership;
(2) Arrears or income due, during the marriage, from obligations which
constitute a charge upon property of either spouse or of the partnership;
(3) Minor repairs or for mere preservation made during the marriage
upon the separate property of either the husband or the wife; major repairs shall
not be charged to the partnership;
(4) Major or minor repairs upon the conjugal partnership property;

(5) The maintenance of the family and the education of the children of
both husband and wife, and of legitimate children of one of the spouses;

(6) Expenses to permit the spouses to complete a professional,

vocational or other course.

Art. 166. Unless the wife has been declared a non compos mentis or a
spendthrift, or is under civil interdiction or is con ned in a leprosarium, the
husband cannot alienate or encumber any real property of the conjugal
partnership without the wife's consent. If she refuses unreasonably to give her
consent, the court may compel her to grant the same.

Art. 173. The wife may, during the marriage, and within ten years from
the transaction questioned, ask the courts for the annulment of any contract of
the husband entered into without her consent, when such consent is required, or
any act or contract of the husband which tends to defraud her or impair her
interest in the conjugal partnership property. Should the wife fail to exercise this
right, she or her heirs after the dissolution of the marriage may demand the value
of the property fraudulently alienated by the husband.

There is no doubt that the subject property was acquired during Ros and
Aguete's marriage. Ros and Aguete were married on 16 January 1954, while the subject
property was acquired in 1968. 1 5 There is also no doubt that Ros encumbered the
subject property when he mortgaged it for P115,000.00 on 23 October 1974. 1 6 PNB
Laoag does not doubt that Aguete, as evidenced by her signature, consented to Ros'
mortgage to PNB of the subject property. On the other hand, Aguete denies ever having
consented to the loan and also denies a xing her signature to the mortgage and loan
documents.
The husband cannot alienate or encumber any conjugal real property without the
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 consent, express or implied, of the wife. Should the husband do so, then the contract is
voidable. 1 7 Article 173 of the Civil Code allows Aguete to question Ros' encumbrance
of the subject property. However, the same article does not guarantee that the courts
will declare the annulment of the contract. Annulment will be declared only upon a
nding that the wife did not give her consent. In the present case, we follow the
conclusion of the appellate court and rule that Aguete gave her consent to Ros'
encumbrance of the subject property.
The documents disavowed by Aguete are acknowledged before a notary public,
hence they are public documents. Every instrument duly acknowledged and certi ed as
provided by law may be presented in evidence without further proof, the certi cate of
acknowledgment being prima facie evidence of the execution of the instrument or
document involved. 1 8 The execution of a document that has been rati ed before a
notary public cannot be disproved by the mere denial of the alleged signer. 1 9 PNB was
correct when it stated that petitioners' omission to present other positive evidence to
substantiate their claim of forgery was fatal to petitioners' cause. 2 0 Petitioners did not
present any corroborating witness, such as a handwriting expert, who could
authoritatively declare that Aguete's signatures were really forged.
A notarized document carries the evidentiary weight conferred upon it with
respect to its due execution, and it has in its favor the presumption of regularity
which may only be rebutted by evidence so clear, strong and convincing as to
exclude all controversy as to the falsity of the certi cate. Absent such, the
presumption must be upheld. The burden of proof to overcome the presumption
of due execution of a notarial document lies on the one contesting the same.
Furthermore, an allegation of forgery must be proved by clear and convincing
evidence, and whoever alleges it has the burden of proving the same. 2 1

Ros himself cannot bring action against PNB, for no one can come before the
courts with unclean hands. In their memorandum before the trial court, petitioners
themselves admitted that Ros forged Aguete's signatures.
Joe A. Ros in legal effect admitted in the complaint that the signatures of
his wife in the questioned documents are forged, incriminating himself to criminal
prosecution. If he were alive today, he would be prosecuted for forgery. This
strengthens the testimony of his wife that her signatures on the questioned
documents are not hers.
In ling the complaint, it must have been a remorse of conscience for
having wronged his family; in forging the signature of his wife on the questioned
documents; in squandering the P115,000.00 loan from the bank for himself,
resulting in the foreclosure of the conjugal property; eviction of his family
therefrom; and, exposure to public contempt, embarrassment and ridicule. 2 2

The application for loan shows that the loan would be used exclusively "for
additional working [capital] of buy & sell of garlic & virginia tobacco." 2 3 In her
testimony, Aguete con rmed that Ros engaged in such business, but claimed to be
unaware whether it prospered. Aguete was also aware of loans contracted by Ros, but
did not know where he "wasted the money." 2 4 Debts contracted by the husband for and
in the exercise of the industry or profession by which he contributes to the support of
the family cannot be deemed to be his exclusive and private debts. 2 5
If the husband himself is the principal obligor in the contract, i.e., he
directly received the money and services to be used in or for his own business or
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 his own profession, that contract falls within the term ". . . obligations for the
bene t of the conjugal partnership." Here, no actual bene t may be proved. It is
enough that the bene t to the family is apparent at the signing of the contract.
From the very nature of the contract of loan or services, the family stands to
bene t from the loan facility or services to be rendered to the business or
profession of the husband. It is immaterial, if in the end, his business or
profession fails or does not succeed. Simply stated, where the husband contracts
obligations on behalf of the family business, the law presumes, and rightly so,
that such obligation will redound to the benefit of the conjugal partnership. 2 6

For this reason, we rule that Ros' loan from PNB redounded to the bene t of the
conjugal partnership. Hence, the debt is chargeable to the conjugal partnership.
WHEREFORE , we DENY the petition. The Decision of the Court of Appeals in CA-
G.R. CV No. 76845 promulgated on 17 October 2005 is AFFIRMED . Costs against
petitioners.
SO ORDERED.
Peralta, Abad, Mendoza and Sereno, * JJ., concur.

Footnotes
*Designated additional member per Special Order No. 978 dated 30 March 2011.
1.Under Rule 45 of the 1997 Rules of Civil Procedure.
2.Rollo, pp. 26-36. Penned by Associate Justice Eugenio S. Labitoria, with Associate Justices
Eliezer R. De Los Santos and Jose C. Reyes, Jr., concurring.
3.Ros passed away on 26 September 1999. He was substituted by Aguete and their ten
children: Joe John, Prospero, Sonia Jacinta, Rossano, Luisito, Pilar Estrella, Leoncio,
Geraldine and Donato Juan, who are all surnamed Ros, and Ingrid Ros-Bautista. Id. at
10.

4.Id. at 27-28.
5.Id. at 37-46.
6.Id. at 46.
7.Records, p. 346.
8.Id. at 348.

9.Id. at 350-355.
10.Id. at 373-375.
11.Id. at 385-388.
12.Id. at 392-393.

13.Rollo, pp. 26-36.

14.Id. at 14.
15.TSN, 8 October 1986, pp. 15-17.
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 16.Rollo, p. 55.

17.Vera-Cruz v. Calderon, G.R. No. 160748, 14 July 2004, 434 SCRA 534 citing Heirs of Ignacia
Aguilar-Reyes v. Spouses Mijares, G.R. No. 143826, 28 August 2000, 410 SCRA 97.
18.See Section 30 of Rule 132 of the Rules of Court.
19.Pan Pacific Industrial Sales Co., Inc. v. Court of Appeals, G.R. No. 125283, 10 February 2006,
482 SCRA 164, 175 citing Sy Tiangco v. Pablo and Apao, 59 Phil. 119, 122 (1933).

20.CA rollo, p. 134.

21.Pan Pacific Industrial Sales Co., Inc. v. Court of Appeals, supra at 174-175 (citations
omitted).
22.Records, p. 327.
23.Rollo, p. 52.
24.TSN, 8 October 1986, pp. 23-24.
25.Perez v. Lantin, 132 Phil. 120 (1968) citing Javier v. Osmeña, 34 Phil. 336 (1916).

26.Ayala Investment & Development Corp. v. Court of Appeals, G.R. No. 118305, 12 February
1998, 286 SCRA 272, 281-282.

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